The Color of Money

by Mehrsa Baradaran

  38. Roberto A. Ferdman, “The Big Problem with One of the Most Popular Assumptions about the Poor,” Washington Post, June 8, 2016.

  39. Children’s Defense Fund, “Child Poverty in America 2015: National Analysis,” http://www.childrensdefense.org/library/data/child-poverty-in-america-2015 .pdf; Edin and Shaefer, $2.00 a Day.

  40. Sendhil Mullainathan and Eldar Shafir, Scarcity: The New Science of Having Less and How It Defines Our Lives (London: Picador, 2014).

  41. Glaude, Democracy in Black, 24.

  42. U.S. Department of the Treasury, Freedmen’s Bank Forum, video, September 23, 2016, http://www.yorkcast.com/treasury/events/2016/09/23/freedmansbank /(pertinent dialogue starts at 19 minutes).

  43. Joseph G. Altonji and Ulrich Doraszelski, “The Role of Permanent Income and Demographics in Black /White Differences in Wealth,” National Bureau of Economic Research Working Paper 8473, September 2001, http://www.nber.org /papers/w8473.pdf; Sharmila Choudhury, “Racial and Ethnic Differences in Wealth and Asset Choices,” Social Security Bulletin 64 (2001), https://www.ssa .gov/policy/docs/ssb/v64n4/v64n4p1.html. Other researchers support this finding showing “no difference in the savings rates of blacks and whites.” W. Hrung, “The Permanent Income Hypothesis and Black /White Savings Differentials,” Department of Economics, University of California at Berkeley, 1997.

  44. U.S. Census Bureau, “Quarterly Residential Vacancies and Homeownership, Fourth Quarter 2016,” http://www.census.gov/housing/hvs/files/currenthvs press.pdf.

  45. James Surowiecki, “The Widening Racial Wealth Divide,” New Yorker, October 10, 2016; Michael J. Graetz, “The Truth about Tax Reform,” Faculty Scholarship Series 1625 (1988), http://digitalcommons.law.yale.edu/fss_papers/1625; Amos Kiewe and Davis W. Houck, A Shining City on a Hill: Ronald Reagan’s Economic Rhetoric, 1951-1989 (New York: Praeger, 1991).

  46. According to a ProPublica study, since George Romney left HUD, there have been only two occasions on which the agency has decided to enforce the Fair Housing Act—the main remaining bulwark against segregation. Nikole Hannah-Jones, “Living Apart: How the Government Betrayed a Landmark Civil Rights Law,” ProPublica, June 25, 2015.

  47. Ibid.

  48. Nikole Hannah-Jones, “Choosing a School for My Daughter in a Segregated City,” New York Times, June 9, 2016.

  49. Jason M. Breslow, Evan Wexler, and Robert Collins, “The Return of School Segregation in Eight Charts,” Frontline, July 15, 2014.

  50. John Eligon and Robert Gebeloff, “Affluent and Black, and Still Trapped by Segregation,” New York Times, August 20, 2016.

  51. Ta-Nehisi Coates, “The Case for Reparations,” Atlantic, June 2014.

  52. The few times HUD has used its FHA powers, which is the only legislative bulwark against racial segregation, have been to enforce disability accommodations. Hannah-Jones, “Living Apart.”

  53. Jonathan Mahler and Steve Eder, “ ‘No Vacancies’ for Blacks: How Donald Trump Got His Start, and Was First Accused of Bias,” New York Times, August 27, 2016.

  54. Tina Nguyen, “What Ben Carson’s History Reveals about His Potential Plans for HUD,” Vanity Fair, December 6, 2016.

  55. Rachel Weiner, “Mitt Romney at Private Fundraiser: I Might Eliminate HUD,” Washington Post, April 16, 2012.

  56. Jessica Attie of the Foreclosure Prevention Project at South Brooklyn Legal Services, quoted on British Broadcasting Company, Newspod, September 19, 2007. Kochhar et al., “Wealth Gaps.”

  57. Zoe Carpenter, “Five Years after Dodd-Frank, ‘It’s Still a Financial System That Needs Reform,’ ” Nation, July 23, 2015, https://www.thenation.com/article/five -years-after-dodd-frank-its-still-a-financial-system-that-needs-reform/.

  58. Debbie Gruenstein Bocian, Wei Li, and Keith S. Ernst, “Foreclosures by Race and Ethnicity: The Demographics of a Crisis,” Center for Responsible Lending, June 18, 2010, 8, http://www.responsiblelending.org/mortgage-lending/research -analysis/foreclosures-by-race-and-ethnicity.pdf.

  59. Glaude, Democracy in Black, 18.

  60. David Min, “Faulty Conclusions Built on Shoddy Foundations,” Center for American Progress, February 2011, http://papers.ssrn.com/sol3/papers.cfm ?abstract_id=2103379.

  61. Charles W. Calomiris and Stephen H. Haber, Fragile by Design: The Political Origins of Banking Crises and Scarce Credit (Princeton, NJ: Princeton University Press, 2014.); Mike Konczal, “No, Marco Rubio, Government Did Not Cause the

  Housing Crisis," Washington Post, February 13, 2013: Elizabeth Laderman and Carolina Reid, “CRA Lending during the Subprime Meltdown," Federal Reserve Bank of San Francisco, February 2009, 115, http://www.frbsf.org/community -development/files/cra_lending_during_subprime_m eltdown.pdf.

  62. Kenneth J. Cooper, “Loans to Minorities Did Not Cause Housing Crisis, Study Finds," New America Media, February 9, 2011, http://newamericamedia.org /2011/02/loans-to-minorities-did-not-cause-housing-crisis-study-finds.php.

  63. Lawrence Kudlow and Stephen Moore, “Are the Clintons the Real Housing Crash Villains?," CNBC, May 28, 2016.

  64. Cooper, “Loans to Minorities Did Not Cause Housing Crisis."

  65. Christopher S. Parker and Matt A. Barreto, Change They Can’t Believe In: The Tea Party and Reactionary Politics in America (Princeton, NJ: Princeton University Press, 2014), 1-3.

  66. Timothy Geithner, Stress Test: Reflections on a Financial Crisis (New York; Crown,

  2014), 391-392. See also Senator Robert Menendez, “Fed Chairman Bernanke Confirms to Menendez that Community Reinvestment Act Is Not to Blame for Foreclosure Crisis," Press Release, December 2, 2008, http://www.menendez .senate.gov/newsroom/press/fed-chairman-bernanke-confirms-to-menendez -that-community-reinvestment-act-is-not-to-blame-for-fo reclosure-crisis; David Min, “Why Wallison Is Wrong about the Genesis of the U.S. Housing Crisis," Center for American Progress, July 12, 2011, https://www.americanprogress.org / issues/economy/reports/2011/07/12/10011/why-wallison-is-wrong-about -the-genesis-of-the-u-s-housing-crisis/; Ben Bernanke, The Courage to Act: A Memoir of a Crisis and Its Aftermath (New York: W. W. Norton, 2015).

  67. Neil Bhutta and Glenn B. Canner, “Did the CRA Cause the Mortgage Meltdown?," Federal Reserve Bank of Minneapolis, Community Dividend, March 1, 2009, https://www.minneapolisfed.org/publications_papers/pub_display.cfm?id =4136&. See also Governor Randall S. Kroszner, “Speech at the Confronting Concentrated Poverty Forum," Federal Reserve, Washington, DC, December 3, 2008, www.federalreserve.gov/newsevents/speech/kroszner20081203a.htm.

  68. “More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions." Moreover, the GSEs had been fully privatized in 1968. Any decision they made to make more loans was a decision their shareholders believed would lead to more profits. The GSEs’ market share of mortgages decreased from 50 percent to 30 percent from 2002 to 2005, while private, non-GSE mortgage buyers increased market share from 10 to 40 percent during those years. Konczal, “No, Marco Rubio."

  69. For accounts on the myth of the “welfare queen" and how they are similar to “subprime borrowers" myths, see Anita Hill, Reimagining Equality: Stories of Gender, Race, and Finding Home (Boston: Beacon Press, 2011), chap. 3.

  70. Peter J. Wallison, “The True Origins of This Financial Crisis," American Spectator, February 6, 2009, http://spectator.org/42211_true-origins-financial-crisis.

  71. Jason Szep, “Activists Challenge Lenders in Mortgage Crisis," Reuters, March 19, 2007.

  72. Hanwen Fan, Qiao Yu, and Xun Wu, “Global Saving Glut, Monetary Policy, and Housing Bubble: Further Evidence," Brookings Institution, July 10, 2015, https://www.brookings.edu/research/global-saving-glut-monetary-policy -and-housing-bubble-further-evidence/; Financial Services Authority, The Turner Review: A Regulatory Response to the Global Banking Crisis (London: Financial Services Authority, 2009), http://www.fsa.gov.uk/pubs/other/turner _review.pdf.

  73. See Simon Johnson and James Kwak, 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown (New York: Pantheon, 2010
), 129, citing JPMorgan Chase marketing flyer.

  74. Rick Brooks and Ruth Simon, “Subprime Debacle Traps Even Very CreditWorthy," Wall Street Journal, December 3, 2007.

  75. Yield spread premiums (YSP) are the money paid to mortgage brokers for giving borrowers a higher interest rate on a loan. “Increased broker profits lead to worse loan performance suggesting that brokers earned high profits on loans that turned out to be riskier ex post." Antje Berndt, Burton Hollifield, and Patrik Sandas, “The Role of Mortgage Brokers in the Subprime Crisis," Carnegie Mellon University, Research Showcase, March 15, 2010, http://repository.cmu.edu/cgi /viewcontent.cgi?article= 1561&context=tepper.

  76. William Julius Wilson, More than Just Race: BeingBlack and Poor in the Inner City (New York: W. W. Norton, 2010), 7.

  77. Powell, “Bank Accused of Pushing Mortgage Deals." “African-American and Latino borrowers were about 30% more likely to receive the highest-cost subprime loans relative to white subprime borrowers with similar risk profiles and that subprime loans in communities of color were more likely to carry prepayment penalties than subprime loans in majority communities." Bocian et al., “Foreclosures by Race and Ethnicity," 6.

  78. Tami Luhby, “Housing Crisis Hits Blacks Hardest," CNN, October 19, 2010.

  79. Eric S. Belsky and Nela Richardson, “Understanding the Boom and Bust in Nonprime Mortgage Lending," Joint Center for Housing Studies, Harvard University, September 2010, http://www.jchs.harvard.edu/sites/jchs.harvard.edu /files/ubb10-1.pdf, 186; Debbie Gruenstein Bocian, Keith S. Ernst, and Wei Li, “Race, Ethnicity and Subprime Home Loan Pricing," Journal of Economics and Business 60 (2008): 110.

  80. Beryl Satter, Family Properties: Race, Real Estate and the Exploitation of Black Urban America (New York: Henry Holt, 2010), 374.

  81. Jeff Kelly Lowenstein, “Judge Orders Compensation for Elderly Black Victims of Reverse Mortgage Scam," Chicago Reporter, January 28, 2016, http://chicago reporter.com/judge-orders-compensation-for-elderly-black-victims-of -reverse-mortgage-scam/.

  82. Jacob S. Rugh and Douglas S. Massey, “Racial Segregation and the American Foreclosure Crisis," American Sociological Review 75 (2010): 629-651.

  83. Charlie Savage, “Wells Fargo Will Settle Mortgage Bias Charges," New York Times, July 12, 2012. Department of Justice, Press Release, “Justice Department Reaches Settlement with Wells Fargo Resulting in More than $175 Million in Relief for Homeowners to Resolve Fair Lending Claims," July 12, 2012, http://www. justice .gov/opa/pr/justice-department-reaches-settlement-wells-fargo-resulting -more-175-million-relief. United States v. Countrywide Financial Corporation; Countrywide Home Loans, Inc.; Countrywide Bank, Complaint, Case No. CV 11 10540-PSG (AJWN), http://www.justice.gov/crt/about/hce/documents/country widecomp.pdf.

  84. Department of Justice, “Justice Department Reaches Settlement."

  85. Powell, “Bank Accused of Pushing Mortgage Deals."

  86. U.S. Attorney’s Office, Central District of California, “Justice Department Reaches $335 Million Settlement to Resolve Allegations of Lending Discrimination by Countrywide Financial Corporation," Department of Justice, June 22, 2015, https://www.justice.gov/usao-cdca/dojcountrywide-settlement-information.

  87. Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions about Health, Wealth, and Happiness (New Haven, CT: Yale University Press, 2008), 134.

  88. Russell D. Kashian, Ran Tao, and Claudia Perez-Valdez, “Banking the Unbanked: Bank Deserts in the United States," 1, http://swfa2015.uno.edu/F_Banking /paper_90.pdf.

  89. Susan Burhouse, Karyen Chu, Ryan Goodstein, Joyce Northwood, Yazmin Osaki, and Dhruv Shar, “2013 FDIC National Survey of Unbanked and Underbanked

  Households," FDIC, October 2014, https://www.fdic.gov/householdsurvey /2013report.pdf.

  90. KPMG, “Serving the Underserved Market, 2011," 1, http://www.kpmg.com/US /en/IssuesAndInsights/ArticlesPublications/Documents/serving-underserved -market.pdf.

  91. Frank Bass and Dakin Campbell, “Bank Branches Disappear from Poor Neighborhoods Like Longwood, Bronx," Bloomberg, May 9, 2013.

  92. John Caskey, Fringe Banking: Check-Cashing Outlets, Pawnshops, and the Poor (New York: Russell Sage Foundation, 1996).

  93. Peter Eavis, “Race Strongly Influences Mortgage Lending in St. Louis, Study Finds," New York Times, July 19, 2016.

  94. Alexandra Stevenson and Matthew Goldstein, “Wall Street Veterans Bet on Low-Income Home Buyers," New York Times, April 17, 2016.

  95. “The Racist Roots of a Way to Sell Homes," Editorial, New York Times, April 29, 2016.

  96. Pew Charitable Trusts, “Payday Lending in America," July 2012, http://www .pewtrusts.org/-/media/legacy/uploadedfiles/pcs_assets/2012/pewpayday lendingreportpdf.pdf.

  97. Paul Kiel and Annie Waldman, “The Color of Debt: How Collection Suits Squeeze Blacks Neighborhoods," ProPublica, October 8, 2015. Breno Braga, “Local Conditions and Debt in Collections," Urban Institute Working Paper, June 2016.

  98. Kiel and Waldman, “Color of Debt."

  99. Ibid.

  100. Judith Scott-Clayton and Jing Li, “Report: Black-White Disparity in Student Loan Debt More than Triples after Graduation," Brookings Institution, October 20, 2016, https://www.brookings.edu/research/black-white-disparity-in-student -loan-debt-more-than-triples-after-graduation/, citing both 93/97 and 08/12 editions of the following: U.S. Department of Education: National Center for Education Statistics, Baccalaureate and Beyond: A First Look at the Employment Experiences and Lives of College Graduates, 4 Years On (Washington: U.S. Department of Education, 1999, 2014), https://nces.ed.gov/surveys/b&b/.

  101. Ibid.

  102. Jake Halpern, Bad Paper: Chasing Debt from Wall Street to the Underworld (New York: Farrar, Straus and Giroux, 2014).

  103. Francis Robles and Shaila Dewan, “Skip Child Support. Go to Jail. Lose Job. Repeat." New York Times, April 19, 2015, https://www.nytimes.com/2015/04/20/us /skip-child-support-go-to-jail-lose-job-repeat.html?_r= 0.

  104. Sophia Kerby, “The Top 10 Most Startling Facts about People of Color and Criminal Justice in the United States," Center for American Progress, March 13, 2012, https://www.americanprogress.org/issues/race/news/2012/03/13/11351/the -top-10-most-startling-facts-about-people-of-color- and-criminal-justice-in -the-united-states/; Glaude, Democracy in Black, 24.

  105. Glaude, Democracy in Black, 23; Stephen Lam, “The State of Black America in a Word: ‘Crisis,’ " MSNBC, March 19, 2015.

  106. Sara R. Collins, “How the Affordable Care Act of 2010 Will Help Low- and Moderate-Income Families," Commonwealth Fund, July 13, 2010, http://www .commonwealthfund.org/publications/blog/how-the-affordable-care-act-of -2010.

  107. Barack Obama, “Proclamation 8400—Minority Enterprise Development Week, 2009," August 20, 2009, https://www.gpo.gov/fdsys/pkg/DCPD-200900657/pdf /DCPD-200900657.pdf.

  108. Barack Obama, “Remarks in Washington, DC: ‘Changing the Odds for Urban America,’ " American Presidency Project, July 18, 2007, http://www.presidency .ucsb.edu/ws/?pid=77007.

  109. Byron Tau, “Obama: ‘I’m Not the President of Black America,’ ” Politico, August 7, 2012.

  110. U.S. Department of Energy, “Minority Banks,” http://energy.gov/diversity /working-us/minority-banks; National Science Foundation, “Chapter III— Financial Requirements and Payments,” January 2008, http://www.nsf.gov /pubs/policydocs/pappguide/nsf08_1/aag_3.jsp.

  111. Bureau of Fiscal Service, “Minority Bank Deposit Program (MBDP),” https://www .fiscal.treasury.gov/fsservices/gov/rvnColl/mnrtyBankDep/rvnColl_mbdp _resources.htm); Office of the Comptroller of the Currency, “U.S. Treasury Department’s Minority Bank Deposit Program,” Winter 2006-2007, http://www.occ .gov/static/community-affairs/community-developments-newsletter/Winter06 /cd/minoritybankdeposit.html.

  112. Federal Deposit Insurance Corporation, “Policy Statement Regarding Minority Depository Institutions,” https://www.fdic.gov/regulations/resources/minority /sop5-only.pdf.

  113. Robert E. Weems, Business in Black
and White: American Presidents and Black Entrepreneurs in the Twentieth Century (New York: New York University Press,

  2009), 222, citing MBDA Basics, http://www.mbda.gov.

  114. Federal Deposit Insurance Corporation, “Policy Statement Regarding Minority Depository Institutions,” https://www.fdic.gov/regulations/resources/minority /sop5-only.pdf.

  115. House of Representatives Subcommittee on Oversight and Investigations of the Committee on Financial Services, “Preserving and Expanding Minority Banks,” October 30, 2007, https://www.gpo.gov/fdsys/pkg/CHRG-110hhrg39916/html / CHRG-110hhrg39916.htm.

  116. Ibid.

  117. “Written Testimony of Robert Patrick Cooper, Chairman Elect National Bankers Association before the Subcommittee on Government Oversight and Investigations of the Committee on Financial Services of the U.S. House of Representatives,” Committee on Financial Services, October 30, 2007, 6, http://archives .financialservices.house.gov/hearing110/htcooper103007.pdf.

  118. GAO Report, “Minority Banks, Regulators’ Assessments of the Effectiveness of Their Support Efforts Have Been Limited,” October 30, 2007, 4, http://www.gao .gov/products/GAO-08-233T.

  119. “Written Testimony of Robert Patrick Cooper,” 2.

  120. House of Representatives, “Preserving and Expanding Minority Banks,” 9.

  121. Ibid., 26.

  122. Ibid., 33.

  123. Nicholas A. Lash, “Asymmetries in US Banking: The Role of Black-Owned Banks,” in Global Divergence in Trade, Money and Policy, ed. Volbert Alexander and Hans-Helmut Kotz (Cheltenham, UK: Edward Elgar, 2006), 99-100.

  124. “Written Testimony of Robert Patrick Cooper,” 2. NBA President Cooper said black banks were “requesting specific, prompt, forceful action at the legislative, regulatory, policy, and procedural level to change the environment in which minority banks operate.”

  125. House of Representatives, “Preserving and Expanding Minority Banks,” 20.

  126. Ibid., 37.

  127. U.S. House of Representatives, Committee on Financial Services-Subcommittee on Government Oversight and Investigations, “Testimony of Kim D. Saunders on Behalf of Mechanics and Farmers Bank,” October 30, 2007, 10, https://www .mfbonline.com/downloads/Saunders_House_testimony_10-30-07.pdf.